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Wyden Joins Forces with Ryan on Medicare

By Mary Agnes Carey, Kaiser Health News

December 15, 2011

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In a move that could hurt Democrats’ ability to campaign against Republicans on Medicare in next fall’s elections, Democratic Sen. Ron Wyden is teaming up with Republican Rep. Paul Ryan on a Medicare overhaul plan that would give beneficiaries a set amount to use toward buying private coverage or to pay for a traditional fee-for-service plan.

Their “premium support” proposal, to be unveiled Thursday at a Bipartisan Policy Center forum, would begin in 2022. Private insurers would compete against traditional Medicare on an exchange, and a yearly bidding process would determine how much money Medicare would spend on each beneficiary.

The cost of the second-least expensive plan, or what fee-for-service Medicare costs — whichever is cheaper — would be the amount provided by the government to beneficiaries, with those payments being adjusted for risk and geography. Seniors who chose more expensive plans would pay more out-of-pocket for coverage, and those who picked plans that cost less than the benchmark amount would get a rebate. Private plans would be required to provide at least the same level of benefits as traditional Medicare. The proposal, which isn’t expected to gain any traction on Capitol Hill in the midst of a heavy campaign season, would cap how much seniors would pay out of pocket for their care – traditional Medicare doesn’t have that now.

Wyden, from Oregon, and Ryan, of Wisconsin, hope that having private plans compete against the traditional fee-for-service will help lower Medicare spending. But if that’s not the case, in 2023 they would place a cap on cost growth “of 1 percent over Gross Domestic Product, plus inflation.” And if costs still increased, Medicare would spend less in other areas, and wealthier seniors would pay more for coverage. “Any increase over that cap will be reflected in reduced support for the sectors most responsible for cost growth, including providers, drug companies, and means-tested premiums,” their plan states.

The plan is similar in approach to a proposal GOP presidential candidate Mitt Romney proposed last month.

Ryan, who is chairman of the House Budget Committee, unveiled a Medicare plan earlier this year that would have eliminated fee-for-service as an option as of 2022 and would have required seniors to pay more for their coverage. A Congressional Budget Office analysis projected that under Ryan’s Medicare plan, by 2030 a typical 65-year old would be required to pay 68 percent of the total cost of his or her Medicare-covered services. That compares with the 25 percent they would pay under current law. Democrats pounced on the Ryan proposal, saying that Republicans wanted to fundamentally change the nature of the entitlement program that provides coverage to 48 million elderly and disabled Americans.

While Wyden is known for reaching across the aisle to craft a compromise – he co-sponsored health overhaul legislation with former Sen. Bob Bennett, R-Utah, in 2007 and 2009 – some Democrats are scratching their heads over why Wyden would team up now with Ryan over the politically sensitive topic of Medicare.

“Why in the world he agreed to help Ryan get out of the rock he was under is beyond me,” said a former senior Senate Democratic aide who asked not to be named due to the sensitivity of the issue. “This is a bad move on a couple different levels, and has the potential to take away a key argument for Democrats that are trying to retake the House.”

Jennifer Hoelzer, Wyden’s communications director, said Wyden and Ryan are putting their proposal out now ahead of campaign season to “show that there is a better way and that Democrats and Republicans really can work together to ensure a reliable future for Medicare. The more we allow Medicare reform to be turned into a political weapon, the harder it becomes to do meaningful reform in the long term.”